Energy rules need to be changed to ensure households that don't embrace new technologies such as battery storage and solar photovoltaic systems are not left picking up the bill, federal Energy Minister Josh Frydenberg says.
As state and federal leaders prepare to discuss energy issues at next week's Council of Australian Governments meeting, Mr Frydenberg said the National Electricity Market had to change to adapt to the influx of new technologies such as wind and solar.
But he said while battery storage and PV systems were being embraced by some households and businesses, governments had an obligation to make sure non-solar/battery households were not slugged with the bill.
"While solar PV and battery storage can offer significant benefits to households and the network as a whole, it is important to get the pricing framework right, otherwise some households will be unfairly forced to pick up the tab for other people's choices," Mr Frydenberg said in a speech to the Australian National University's Energy Change Institute in Canberra on Tuesday.
Generous state feed-in tariffs for rooftop solar PV systems over the past decade – where solar households were subsidised to sell energy back into the grid – led to spike in electricity prices as network charges were passed on to non-solar households in the form of higher power bills. This led to state governments closing solar schemes or limiting them to new entrants.
Mr Frydenberg said while consumers were "hungry" for new and more affordable technologies – such as battery storage or "neighbour to neighbour trading" – they were changing the way the NEM operated.
"This is creating challenges for fairly sharing the costs of supplying electricity," he said.
Mr Frydenberg said the state-wide black out in South Australian in September showed the challenges facing the NEM and the need to ensure the move towards renewables did not affect energy security.
While other countries around the world also faced the move from fossil fuels to lower emissions technologies, Australia's geographic isolation made it even more challenging, he said.
Other countries such as Germany, where wind and solar accounted for 20 per cent of the nation's energy needs, could tap into the wider European grid when the intermittent power was not operating at full capacity.
"This allows them to overcome some of the security and reliability challenges arising from a higher mix of intermittent renewables in the electricity system," Mr Frydenberg said.
"Where Germany has far more options to manage its electricity supply through a wider European grid, the NEM is isolated. In Australia the challenge of balancing differing loads from the integration of intermittent renewable generation has to be managed much more closely and with fewer options."
The Finkel review into energy security, chaired by chief scientist Alan Finkel, is looking into how non-synchronous generation such as wind and solar can provide stable electricity supply, including the 50 hertz required for proper frequency, in the NEM.
A preliminary report from the Finkel review will be delivered to next week's COAG meeting, with the final report due in the first half of 2017.
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